The economic outlook for the global economy remains positive, but risks of a correction have increased sharply as a result of increasing trade tensions. Geopolitical risks and vulnerabilities in various emerging economies are also worrying.

In this piece, we analyze which region loses most because of the TPP withdrawal by Trump. The US withdrawal has given China, which was excluded from TPP, opportunities to fill a void and to further expand its influence in Asia.

A balance of payments crisis is unlikely in today’s Asia. Most countries have improved their current accounts and FX reserves. The rising debt load may however pose problems, although it nowadays is mainly local currency denominated.

Strong economic growth has diminished poverty in the region and will swell the ranks of the middle class. But corruption levels are high, China’s influence in the region is increasing and the dispute surrounding the South China Sea may generate stability risks.

Asia Pacific is a decisive component in the global food chain. Asia’s large and growing population and rising incomes will continue to drive demand for food, agricultural commodities and resources. But Asia cannot produce enough to support itself.

Demographics will provide headwinds in the developed countries of APAC and China, and tailwinds in South Asia. While total factor productivity growth has fallen, the innovation outlook for the APAC region is still relatively favourable.

The economic growth outlook has worsened due to less favorable global outlook, which keeps key commodity prices low. The risk of a sharp correction of house prices in Auckland has induced the government to implement additional macro-prudential measures.

Economic growth is slowly decelerating in New Zealand due to prolonged low commodity prices. Low milk prices put a strain on the dairy sector. Meanwhile, the RBNZ in general softened its LTV restrictions, but tightened it for the Auckland area.

New Zealand experiences relatively strong, domestic-driven, economic growth. A major risk to the outlook is the current deterioration of the terms-of-trade. Meanwhile, the central bank slowed down the potentially overheating housing market.

New Zealand suffers from a persistent gap between savings and investment. Growth is currently gaining momentum, but this is mainly credit-driven. House prices are increasing fast and the necessary deleveraging process has been put into reverse.